Bitcoin Futures Surge $1.2B Post-FOMC, Retail Spending Plummets 50%

Bitcoin futures metric adds $1.2B after FOMC, but retail investor spending is down 50% — Why?

The Bitcoin futures market has seen a significant increase of $1.2 billion following the Federal Open Market Committee (FOMC) meeting, while retail investor spending has dropped by 50%. This discrepancy raises questions about the current state of the cryptocurrency market and the behavior of retail investors.

Analysts have been monitoring the order-book depth at the 1-5% range for Bitcoin, which has historically signaled potential bottoms when it dips below 135 million. Recent instances around January 13 and 21 showed strong support levels, suggesting limited sell-side pressure and a possible setup for a bullish reversal.

Retail investors have been taking on more risk, as indicated by the soaring Estimated Leverage Ratio (ELR). This increased risk-taking could be a sign of confidence in the market or a trap for leveraged long traders. The uptrend in leverage could also precipitate steep declines, as seen in 2022 when the ELR decreased, signaling a reduction in risk-taking during the downturn.

Market cycles have shown significant shifts when Bitcoin surpasses 2.4 times its 200-day SMA. The current value is set at $184,600, which is yet to hit. Historically, when BTC exceeded this threshold, it was followed by a cycle shift. During the 2021 bull run, BTC reached peaks above $60K, aligning with its crossing of the 2.4x multiplier of its 200-day SMA and dropped.

As Bitcoin approaches these levels again, historical patterns suggest potential for continued uptrend. If Bitcoin maintains current momentum, it could head towards the $184,600 level, benefitting the leveraged retail investors. Conversely, failure to hold on momentum could indicate a cooling off, possibly leading to a consolidation phase or a downturn, which would result in pain for the leveraged retail investors.